China utilizes foreign capital through various channels and forms, which fall into three major categories: foreign loans, including loans from foreign governments, international financial organizations and foreign commercial banks, export credits, and issuance of bonds overseas; direct foreign investments, including Chinese-foreign joint ventures, Chinese-foreign cooperative enterprises, wholly foreign-funded enterprises and Chinese-foreign cooperative development projects; and other foreign investments, including international leasing, compensation trade, processing and assembly and issuing stocks overseas. From 1990 to 2001, foreign capital utilized by China in real terms totaled US$510.8 billion, including US$ 378 billion of direct investments by foreign businesspeople.
In 2002, foreign capital utilized by China in real terms came to US$ 55 billion, including US$ 52.7 billion direct foreign investments, ranking the country first in absorbing foreign capital in the world for the first time. The State Development and Reform Commission holds that under the situation in which the world economy is depressed — with international investment decreasing considerably — China has achieved this prominent success in absorbing foreign capital through having kept its word when entering the WTO to reduce the overall level of the customs duty, lift the restrictions over the fields for foreign investment and financing, open wider to the outside world, and revise and perfect foreign-related laws and regulations.
Since the early 1980s China has worked to create a favorable environment for foreign investors. The Chinese government has promulgated more than 500 foreign-related economic laws and regulations to provide legal and other guarantees for foreign investors in China. At the end of 1997, China revised and promulgated the Directory of the Industries for Foreign Investors to encourage and support foreign businesspeople to invest in the comprehensive development of agriculture, energy, communications, important raw and processed materials, new and high technology, the comprehensive utilization of resources, and environmental protection. In accordance with the rules of the WTO and China's promises, China has sorted out 2,300 laws and regulations. Some 830 were abolished, and 325 amended. With revision of foreign-related laws and regulations, a foreign-investment law system with the Law on Chinese-Foreign Joint Venture, the Law on Chinese-Foreign Cooperative Enterprises, the Law on Foreign-funded Enterprises and the relevant rules for the implementation of these laws—as the basic mainstay has been formed. By the end of 2002, foreign businesspeople from more than 170 countries and regions have invested in China, with a total of 424,000 foreign-invested enterprises. Of the 500 top transnational companies in the world, over 400 have invested in China. China has come to be regarded as one of the countries with the best investment environment by investors and financial circles across the world.
